From the Wall Street Journal:
"There’s a new rivalry in tech: Amazon versus TikTok.
"TikTok made a name for itself in the U.S. as a viral video-sharing sensation. Now it’s trying to get its 150 million U.S. users to think of it as a shopping destination.
"Amazon, meanwhile, is trying new tactics to maintain its dominance in e-commerce. It has added social elements to its app to entice younger shoppers, and it is building up a network of influencers who hawk items on and off its website.
"As a result, the two companies are on a collision course as they vie for position in a huge market. Researchers at Insider Intelligence estimate social e-commerce will grow into a $100 billion market by 2025, from $67 billion this year.
"To succeed, each company will need to copy elements of the other’s success. TikTok, owned by Beijing-based ByteDance, wants customers to trust it as a safe and reliable place to buy products, the way many already trust Amazon. And Amazon is trying to persuade users to hang out on its app like they do on social-media services."
TikTok, the story says, is not to be underestimated:
"TikTok launched its shopping feature, called TikTok Shop, last month and is currently selling about $7 million worth of products like hairbrushes, teeth-whitening tools and fall-themed sweatshirts with leaves and pumpkins every day in the U.S., with a goal of reaching $10 million a day by the end of the year, according to people familiar with the matter. Amazon’s global online store sales—a measure of the products Amazon sells directly—was roughly $603 million a day last year.
"TikTok is spending heavily to build a logistics operation, poaching Amazon employees and trying to lure third-party sellers by offering them a bigger cut of sales than Amazon, according to sellers. More than 60% of Amazon’s retail sales come from third-party sellers … TikTok’s biggest advantage is its ubiquity in the U.S. The roughly two hours a day on average that U.S. users spend on TikTok leaves other companies jealous. On Amazon, U.S. customers spend an average of about 9.7 minutes a day, according to market-research firm data.ai, which tracks usage on Android devices."
- KC's View:
Not a TikTok user, but I do think that it could be a formidable challenger to Amazon over the long term. Amazon may be trying to incorporate some social media features into its site, but I think it may be easier to go the other way - layer e-commerce on top of an incredibly robust social media presence.
It isn't just Amazon that should be concerned, though. I would think that Walmart, which has been aggressive in building an infrastructure that will rival Amazon's, also needs to worry about how fast TikTok gets big in this space.